Greek Crisis

Abstract

The Greek crisis started in 2009 as a result of the global financial crisis of 2008, and it officially ended in August 2018 when Greece exited the Third Economic Adjustment Programme that it had signed with its international lenders to avoid default. Greece had to seek help from international lenders, including the European Commission (EC), European Central Bank (ECB), International Monetary Fund (IMF), and, in the last program, the European Stability Mechanism (ESM), three times (2010, 2012, and 2015). The crisis soon spread to other European Monetary Union (EMU) countries—namely Portugal, Ireland, Spain, and Cyprus—and it was transformed into a Eurozone crisis, with some commonalities but with different characteristics in each case. The Greek crisis was a sovereign debt crisis that resulted from a continuous aggravation of the national economic indicators, such as growth, inflation, and unemployment, serious long term structural shortcomings, and the pressure from the global financial crisis. The economic crisis was soon translated into a political crisis that shook the Greek party system and strengthened more radical parties such as the left-wing Syriza and the neo-fascist Golden Dawn. Strong one-party governments became a memory of the past and were replaced by short-lived coalition governments. The economic pressure also led to a serious social crisis with rising poverty levels, unprecedented numbers of homeless, and a welfare system unable to cope with the increasing demands. It posed questions about the shape of Greece’s political and social institutions, its legal system and Constitution, and its public administration’s capability to cope with the crisis and implement the conditionality attached to the three economic adjustment programs. Last but not least, the Greek crisis brought into fore the weaknesses and discrepancies of the EMU and was the motive behind important structural reforms, such as the creation of new financial assistance and surveillance mechanisms, including the ESM, as well as the strengthening of informal institutions such as the Euro summits. The discussion was soon extended to a questioning of the viability of the European Union (EU) project, the role of Germany, and the changing Europeanization mechanisms. The bibliography about the Greek crisis developed quickly and covers economic, political, social, and legal issues concerning not only Greece, but also the EU as a whole, taking the case of Greece as a starting point.